Financial highlights of Q1 2007

Despite of the disposal of the daughter company SPOLANA, which does not contribute to the group’s results any more, UNIPETROL’s total revenues grew by 2% compared to Q1 2006 and amounted to CZK 20.63bn. Profits increased significantly in y/y comparison when EBITDA grew by 57% and net profit even doubled. Sales volumes grew in all segments, most strongly in fuel retail where the sale of 136 million liters meant a nearly 26% growth compared to the first quarter of the previous year. Based on recent market data the UNIPETROL group maintains a strong market position in fuel wholesale where it holds a 35% share in gasoline and a 32% share in diesel sold on the Czech market.

Consolidated, non-audited results Q1 2007 (million CZK)

* One-offs Q1 2006: Adjustment for hydrocracker shutdown in March 2006 with gross margin negative impact of CZK 300m and excluding SPOLANA Q1 2006 EBIT of CZK 122m and depreciation of CZK 93m. One-offs Q1 2007: Adjustment for KAUČUK impairment (accrued profit in Q1 2007 and depreciation) of CZK 449m.

Outlook for the rest of 2007

In the first quarter of this year UNIPETROL continued in implementation of its long-term strategy. In 2007 a significant stage of BENZINA´s retail network modernization will be finalized by introducing 156 out of BENZINA´s total 319 filling stations to be reconstructed and 78 of them being upgraded to BENZINA Plus premium brand. “So far nearly 30 stations have been completed and for most of the rest the preparatory work, such as building permits and construction planning, has also been done. I am convinced that at the end of this year the change will be visible to everyone driving on the Czech roads,” says François Vleugels, CEO of UNIPETROL.

The implementation of the New Corporate Governance Model is also well on track. The process of change that started last year is aimed at the elimination of bureaucracy, simplification and unification of processes as well as the further development of commercial excellence within the UNIPETROL group. “The new structure of Business Units as well as the Shared Service Centre and the Supply Change Management has been set up and are running. Recently we have also completed the earlier announced transformation of BENZINA, PETROTRANS and UNIPETROL DOPRAVA to limited liability companies, which should simplify their management and speed up decision making”, says François Vleugels. “The next step will be the merger of CHEMOPETROL and UNIPETROL RAFINÉRIE in August to create a strong and efficient commercial unit,”he adds.

Another strategic project is the Partnership Program that started in 2005, and is focused on identifying and utilising synergy effects between UNIPETROL and PKN ORLEN. So far improvements worth an extra 109 million EUR in 2006 EBITDA have been identified and utilised through approx. 140 different initiatives and activities. The centralisation of the procurement of crude oil, the adoption of the best practice in servicing the Litvínov steam cracker or the transfer of marketing know-how in fuel retail are examples of the most significant areas of co-operation. By the end of the programme it should have generated an additional 138 millions EUR in 2008 EBITDA (under the 2004 macroeconomic conditions).

Strong financial performance should continue for the rest of this year, however good results in its first half will be unfortunately weakened in the later part of the year by planned shutdowns in UNIPETROL production plants. Shutdowns – due to regular maintenance and in some cases also due to the enlargement of production capacity – are scheduled in ČESKÁ RAFINÉRSKÁ for max. 8 weeks in CHEMOPETROL, for max. 6 weeks in the steam cracker, 4 weeks in polyolefins and in PARAMO for max. 3 weeks. “The shutdowns will unfortunately bring one-off costs however the resources spent for maintenance and capacity expansion in this year will be harvested in the years after,” says Petr Sosík, CFO of UNIPETROL.

As announced earlier the overall 2007 investment in UNIPETROL will rise to nearly CZK 5.5bn compared to CZK 3.9bn in 2006 (ČESKÁ RAFINÉRSKÁ 100%).

Results by particular segments

Refining: The refining business, traditionally strongly influenced by macroeconomic conditions, has marked a fairly good quarter influenced by improving margins (USD 4.11/bbl compared to USD 2.9/bbl in Q4 2006). Sold volumes went up by 14% (y/y) and the segment contributed to the group’s EBIT by nearly CZK 488 millions.

Petrochemicals: After CHEMOPETROL´s record results in 2006 the petrochemical segment remained the main driver of the group’s successful performance. The main factors that produced such good results are the full utilization of available production capacities and favourable market conditions for the company products. The segment contributed to the group’s EBIT by nearly CZK 1.777bn while CHEMOPETROL itself reported for Q1 2007 revenues of CZK 8.9bn and net profit of 1.1bn.

Retail: BENZINA also confirmed a trend of strong improvement in the first quarter. The company’s sales were 26% higher than a year ago and improved service standards, successful promotion, and strengthened organization also brought results. On the other hand the financial results were pulled down by the generally low margins on the Czech market in this period. Despite this BENZINA has reported revenues of CZK 1.7bn (+18.7% y/y) and a significant EBIT improvement. Although the ongoing investments pulled the net result down (4 millions CZK) it still represents a significant improvement compared to the first quarter of 2006 (-208 millions CZK). The whole retail segment contributed by CZK 98 millions to the group’s EBIT.

UNIPETROL is a group of companies operating in the petrochemical industry in the Czech Republic. In 2005 UNIPETROL became part of the PKN ORLEN Group, the largest downstream oil company in Central Europe. UNIPETROL primarily focuses on crude oil processing, fuels distribution and petrochemical production. In all these areas UNIPETROL is one of leading players in both the Czech and Central European markets. It has about 4,000 employees. In 2006 UNIPETROL recorded revenues amounting to CZK 95 billion and a net profit of CZK 1.6 billion.

Contact: 
Michaela Lagronová 
Spokesperson 
Unipetrol, a.s. 

Mobile: +420 602 304 708 
E-mail: michaela.lagronova@unipetrol.cz 
www.unipetrol.cz